@RepDarrellIssa Holds a Hearing on the Mechanical Licensing Collective

By Chris Castle

U.S. Representative Darrell Issa and the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet that he chairs will hold a field hearing on Tuesday, June 27, 2023, at 10:00 a.m. CT at Belmont University, Gabhart Student Center, in Nashville, Tennessee. The hearing, entitled “Five Years Later – The Music Modernization Act,” will focus on the entire blanket licensing regime added to the Copyright Act by the MMA to (1) administer blanket mechanical licenses for “covered activities” (largely streaming) and (2) to collect and distribute compulsory mechanical licensing royalties. 

Most importantly, the IP Subcommittee website tells us that “[t]he hearing will also explore whether the legislation is operating as intended by Congress and consider reforms.”  So why is this happening and why is it happening right now given everything else that Congress is dealing with.

Congress considers whether to renew The MLC, Inc.‘s designation as the mechanical licensing collective. If that sentence seems contradictory, remember those are two different things: the mechanical licensing collective is the statutory body that administers most of the compulsory license under Section 115 of the Copyright Act that was the entirety of Title I of the Music Modernization Act (aka the Harry Fox Preservation Act). The MLC, Inc. is the private company that was “designated” by Congress through its Copyright Office to do the work of the mechanical licensing collective. This is like the form of a body that performs a function (the mechanical licensing collective) and having to animate that form with actual humans (The MLC, Inc.). The MLC, Inc. was designated by the Copyright Office in 2019.

Congress reviews the work product of The MLC, Inc. every five years (17 USC §115(d)(3)(B)(ii)) to decide if Congress should allow The MLC, Inc. to continue another five years. That is, Congress has the right to fire The MLC, Inc. and find someone else if they fail to perform. Hence, “Five Years Later” in the title of the field hearing. This process is called “designation” or “redesignation” and is performed for Congress by the U.S. Copyright Office in their soft oversight role.

That five year period is actually up next year, so Congress may be getting an early start to identify performance benchmarks for The MLC, Inc. so that the Copyright Office doesn’t have to wing it. If you have some thoughts about what The MLC, Inc. could be doing better or is doing well, you have a chance to write to your representative or even members of the subcommittee before (or after) the June 27 hearing and let them know.

The witness list is well-chosen and seems unlikely to produce the usual propaganda from the controlled opposition that the lobbyists usually try to spoon feed to lawmakers:

I have a few concerns myself. 

  1. Investment Policy: According to its 2021 tax return, the MLC, Inc. was at that time holding more than $650 million in publicly traded securities. According to the MLC, Inc.’s annual report (at p. 4), this sum seems to include the $424 million of black box monies that the MLC, Inc. received in 2021. Congress is entitled to know exactly how this money is handled, where it resides and who is responsible for making investment decisions.

    Congress should consider whether all black box sums and unspent operating costs advanced by blanket licensees should be held in a bank account controlled by the US government so that there is no confusion if Congress fires The MLC, Inc. or any successor.

    Congress should also consider whether the same fiduciary duties apply to The MLC, Inc.’s management of the black box as would apply to a pension fund (under ERISA) or comparable duty. (There’s lots of pension funds and even banks with less than $600 million in assets and they are all regulated.) At least with a pension fund the fund trustees know who they owe money to; The MLC, Inc. seems like it should have an even higher responsibility to be good stewards of money it owes to the very unknown songwriters Congress tasked it with finding, thus cementing the moral hazard.  

    It goes without saying that the infamous “Hoffa Clause” in the MMA should be repealed (17 U.S.C. § 115 (d)(7)(C)). The Hoffa Clause allows the collective to dip into the black box to pay its expenses if the millions of the administrative assessment paid by the blanket licensees just isn’t quite enough.
  2. Succession Plan: What if Congress did fire The MLC, Inc.? Is there a succession plan in place that would allow the seamless transfer to a new collective of databases, operating software, cash on hand, and of course the black box? If there is a succession plan in place, then perhaps Mr. Ahrend should bring it with him to Chairman Issa’s hearing for the records. If not, perhaps he could draft one. In any event, Mr. Ahrend should have ready answers to at least some questions about a succession plan should the Subcommittee ask him. After all, the lobbyists wrote the bill and the five year review language was written into the earliest drafts so he should expect a few questions about what happens. Particularly since the Subcommittee has announced that they want to know “…whether the legislation is operating as intended by Congress and consider reforms.”
  3. Nondisclosure Agreements: I am struck by the fact that there have been no leaks of information about the black box, investment policy, or even life at The MLC, Inc. This usually means that there are nondisclosure agreements in place that scare people into silence–along with a healthy dose of intimidation in a small and incestuous industry when it’s likely that your employer is on the board of directors. Maybe not, but Congress may want to find out what these people are up to so it can decide if it wants to let them keep doing it. This may seem like a small issue, but either people aren’t talking because they have nothing to say or people are talking but nobody will print the story.
  4. Songwriter Directors and Geographical Diversity: The hearing may provide a good opportunity for the Subcommittee to look into how the collective’s controversial board composition is working out, not to mention the membership levels in the confusing by laws of The MLC, Inc. For example, I for one really see no reason to continue the concept of non-voting directors on the board, and Congress could just eliminate that role. One need only look to other collectives and PROs in the US and around the world for examples. A non-voting board member is a close analog to a “board observer” which is usually someone appointed by an investor to essentially spy on the board.  

    Similarly, it must be said that all the board members are either from New York, Nashville, Los Angeles or are lobbyists from the Imperial City. There are songwriters all over the country and internationally. Since the collective is really a quasi governmental organization, it is entirely in the remit of Congress to increase transparency and fairness as well as diversity. This could be accomplished by requiring an equal number of songwriter and publisher directors and having them come from states or regions with a big music contribution to America such as one of the reservations ,Atlanta, Chicago, Houston, Miami, New Orleans, Tulsa or Appalachia.  
  5. Revisit the Compulsory License: There is, of course, the threshold question of whether the compulsory license should be continued at all. This five year examination really should include this fundamental review rather than just blindly pushing forward with the compulsory license. (I discussed this in some detail in a separate post.) One songwriter has suggested that the Copyright Office reprise another study on the continued viability of the entire compulsory license system and I think he’s got a point there. Perhaps the Subcommittee could task the Copyright Office with conducting such a study as a finding of the field hearing. Those studies allow the public to comment without fear or favor which would be a breath of fresh air. Congress could then hear from more people whose jobs depend on the system working well resulting in the payments to songwriters that Congress wanted rather than the system just stumbling on resulting in high salaries to the operators and little to no transparency.

    Let’s see what happens at the field hearing.  You can watch it here courtesy of the YouTube monopoly.



    This post first appeared in MusicTechPolicy
by Trichordist Editor

Let’s #PreserveRockwood

New York City’s Rockwood Music Hall is one of the most important venues in the country, especially for independent artists. This is not just a dagger in the heart of New York, it’s a vital platform for artists to reach a New York audience on one of the three Rockwood stages. Like many venues, Rockwood is in financial trouble and is asking for help.

Our friend Blake Morgan has had tremendous support from Rockwood as a long-time artist in residence so this strikes close to home. Blake says “I grew up on the Lower East Side.” I remember when we lost CBGB’s, The Living Room, Luna Lounge, and so many others. Rockwood cannot meet the same fate, it’s the Ryman Auditorium of independent music in this country.”

If you’re not able to attend one of the Rockwood Benefit Concert series, please consider a contribution to the venue through their Go Fund Me page. Find out more about it at Preserve Rockwood.

https://twitter.com/RockwoodNYC/status/1672245197571325955
by thetrichordist

Science Journal Nature Bars AI Generated Illustrations

Well that was only a matter of time.  Nature, one of the leading scientific journals in the world, has announced that it will not allow the use of generative AI images or video. (Thanks to Cynthia Turner for the catch.). 

I must say that the journal’s rationale for rejecting this latest stop in Silicon Valley’s newest bubble is a pretty concise statement of the criminality of the bubble riders:

Why are we disallowing the use of generative AI in visual content? Ultimately, it is a question of integrity. The process of publishing — as far as both science and art are concerned — is underpinned by a shared commitment to integrity. That includes transparency. As researchers, editors and publishers, we all need to know the sources of data and images, so that these can be verified as accurate and true. Existing generative AI tools do not provide access to their sources so that such verification can happen.

Then there’s attribution: when existing work is used or cited, it must be attributed. This is a core principle of science and art, and generative AI tools do not conform to this expectation. (Not to mention the Universal Declaration of Human Rights (article 27(2)) among other human rights instruments.)

Consent and permission are also factors. These must be obtained if, for example, people are being identified or the intellectual property of artists and illustrators is involved. Again, common applications of generative AI fail these tests.

Generative AI systems are being trained on images for which no efforts have been made to identify the source. Copyright-protected works are routinely being used to train generative AI without appropriate permissions. In some cases, privacy is also being violated — for example, when generative AI systems create what look like photographs or videos of people without their consent. In addition to privacy concerns, the ease with which these ‘deepfakes’ can be created is accelerating the spread of false information.

So that about sums it up. I would add that what Silicon Valley likes is the free-riding profit that is built in to failing to honor each of Nature’s objections aka what economists and tort lawyers call negative externalities.

by thetrichordist

Guest Post: Attempts to Ban the Song “Glory to Hong Kong” Illustrate Just How Powerful and “Dangerous” Music is Perceived to Be

By Charles J. Sanders

We’ve all seen the headlines from around the world. Musicians, songwriters and composers attacked as rabble-rousers and enemies of the state. Singers arrested, their performances banned as un-patriotic or sacrilegious. We’ve even seen lethal attacks committed against music creators for refusing to perform, or simply for attempting to entertain, not even to proselytize or lampoon.  And just in the past few days, we have seen legal action instituted by a foreign global power against the performance of domestic protest music on a global basis.

No matter our individual political or musical affiliations, the mission of the American music community is clear. We must quickly and effectively formulate ways to help curb this global, governmental trend of singling out artists and music creators for punishment, due in large measure to the perceived, “dangerous” power of music.  Case in point:

In 2019, amid civil unrest in Hong Kong over Chinese Government efforts to crack down on what it deems unacceptable speech, a pro-Hong Kong Independence movement leader known only by the pseudonym “Thomas dgx yhl” penned a song known as “Glory to Hong Kong.”  The composition was immediately embraced by Hong Kong street protesters, translated into various languages on the Internet, and eventually widely recorded and distributed.  In short order, those recordings were being played not only on the Net but in Hong Kong shopping malls and at sporting events and other gatherings, prompting public sing-alongs that have increasingly alarmed Chinese Government officials in Beijing.[1]  

Two weeks ago, on June 5, 2023, the Beijing-aligned Government of Hong Kong announced it had heard enough.  Having previously banned the secessionist anthem “Liberate Hong Kong” after protests began in 2019, it went to court seeking an even broader injunction against “Glory to Hong Kong” that if granted would bar performance, broadcast, and distribution of the song throughout China (and potentially lead to the punishing of Chinese citizens and companies operating in China for violating the ban elsewhere in the world).  According to the Government’s court submissions, the song’s lyrics are meant to provoke secessionist acts in violation of Chinese law, and the court should act to eliminate the dangerous confusion that has been caused by the “mistaken use” of the song in place of the official Chinese national anthem at local and international events in Hong Kong and elsewhere.[2]  Court hearings are scheduled to resume in Hong Kong on July 21, 2023.

As is often the case when governments attempt to ban musical works, the song instantly skyrocketed in popularity.  Within days of the court filing, “Glory to Hong Kong” topped the Apple iTunes charts, which may have resulted in further governmental action behind the scenes. The original version of the song recorded by DGX Music (presumably related to Thomas dgx yhl) has now reportedly been pulled from global music streaming platforms such as Spotify, Apple Music, Facebook and Instagram’s Reels system.  According to DGX, the disappearance of its version from these services is due to the company’s “dealing with some technical issues related to streaming platforms,” and it expressed regret for this “temporary” issue.  The specter of likely governmental coercion against the creator(s), the label and its distributors, however, continues to hang heavily over the entire incident. 

Obviously, what we are witnessing in real time is yet another in a nearly endless series of attempts by governments and powerful interests around the world to forcibly remove politically contentious musical works from the public sphere and punish their creators. 

This past March, the National Music Council of the United States (NMC), in partnership with the International Music Council (IMC) based in Paris, explored the historical roots of this phenomenon in the hopes of helping the world-wide music community to fashion strategies for ensuring more effective, speech-related protections for music creators in the future.  The NMC’s extensive briefing papers for the symposium trace the long litany of repression and coercion against individual creators who used their music to protest social and political injustice, including the murder by the extreme right-wing Pinochet regime in Chile of folksinger Victor Jara, the genocide carried out against Cambodian musicians and composers by the extreme left-wing Khmer Rouge Regime, and the attempted erasure of Native American/First Nation/Aboriginal music and culture by Constitutional democracies including the United States, Canada, the UK and Australia—efforts that often resulted in the brutal deaths of those who resisted.[3]  

Music-based repression and coercion, the NMC concluded, are clearly global problems unlimited by either their political or geographic origins:

Music’s dual, facile ability to serve as both a powerful tool of propaganda and as an existential threat to power structures and political leaders has made it a prime focus of nervous governmental concern over the entire span of history….[M]usic creators and performers have [thus] not only been frequently subject to pressure to conform and participate in governmental propaganda efforts, but also to repressive actions up to and including murder to enforce the silence of those dangerous, high-profile individuals who will not comply. In many cases, this effectively neuters the most persuasive voices of protest, while at the same time setting an example of what happens to those less visible citizens who choose dissent. The repression of music and creators is a government’s way of warning all of its people, “if this is what we’ll do to them, imagine what we’ll do to you.”

For the American music creator community, it’s that last point that should be our initial, paramount concern.  While we may argue over whether certain a musical expression (other than outright hate speech) constitutes patriotism or treason, it is incumbent upon us to champion the position that violence and imprisonment for expressing unpopular views should not be imposed on any person by any government, anywhere.  Though speech freedom advocates may argue for a far broader effort to protect free musical expression –and in the future that may come– job one is to protect the lives and liberties of music creators who have been singled out today for political punishment. 

How?  By not remaining silent. 

At the NMC/IMC symposium, international experts and activists such as Ole Reitof of UNESCO, Julie Trébault of the Artists at Risk Coalition, Mark Ludwig of the Terezin Music Foundation, Dr. Ahmad Sarmast of the Afghanistan National Institute of Music, and Arn Chorn Pond of the Cambodian Living Arts organization, all agreed on the opportunities for the US music community to protect fellow, global music creators and performers from official repression by speaking out in appropriate ways.  Their advice may be distilled to three basic principles:

First, do no harm. This Hippocratic starting point for every effort to assist requires that all international actions must be carefully calibrated to avoid backlash against the endangered individual or group, and should be undertaken only in consultation with those knowledgeable about the local intricacies related to each incident. 

Second, take action by shining a spotlight in the United States on the most egregious cases of music suppression wherever in the world they take place.  Write letters to the White House, to Congress, and to the US State Department and the US Trade Representative concerning individual cases, requesting that the US Government take appropriate steps to save the lives and freedoms of those at risk.  (Other actions may be contemplated, but only after the “no harm” principle has been fully strategized).

Third, for those not willing or unable to take such actions, lend support to organizations engaged directly in protecting the lives and liberties of members of the music community around the world.[4]  

Artistic activism and the defense of it will never be an act of courage devoid of risk.  The ability in the US to speak out on such issues principally without fear of government reprisal, however, places on us a special responsibility to shine that brighter light on these escalating injustices and attacks.  Our community’s responsibilities are to ensure that such anti-democratic activities not remain hidden in the shadows, no matter where in the world they occur—including within our own borders. 

If history has taught us one thing about the persecution of artists and creators, it is that silence is neither an effective nor an acceptable strategy.

Charles J. Sanders

Chair, The National Music Council of the United States

[1] An English language version of the song is accessible at https://www.youtube.com/watch?v=6yjLlYNFKCg.

[2] Hong Kong, a former British protectorate the rule over which was transferred to Beijing in 1997, has continued to maintain its own political and economic systems for the past quarter-century.  Within the past decade, however, the Government of China has concentrated its efforts on bringing Hong Kong more closely in line with Beijing’s governing philosophies—including the stricter control of political speech.  In its submission to the court, the Government pre-emptively sought to quash accusations of censorship by asserting that Beijing “respects and values the rights and freedoms protected by the Basic Law (including freedom of speech), but freedom of speech is not absolute…. The application pursues the legitimate aim of safeguarding national security and is necessary, reasonable, legitimate, and consistent with the Bill of Rights….”

[3] See, https://www.musiccouncil.org/music-politics-history/.  The author of this statement was also the author of the Briefing Papers on behalf of the NMC.

[4] For a list of some non-profit organizations engaged in such activities, see, https://www.musiccouncil.org/protecting-free-speech-in-the-global-music-landscape/

by Trichordist Editor

What would MCA Do? Spotify Shows Censorship for the Money–What Else Are They Doing? #FreeJimmyLai

Also read Associated Press “Former Bytedance executive says Chinese Communist Party tracked Hong Kong protesters via data” (Bytedance is the parent company of TikTok.)

Spotify follows bidding of tyrannical Chinese Communist Party while long time Hong Kong freedom fighter Jimmy Lai rots in prison after show trial.

by Trichordist Editor

Win Your Office Pool on MLC Salary Raises!

If you’re like us, you have an office pool on who will win the eagerly anticipated release of the MLC’s 2022 tax return! “Winning” in this case means who will get the biggest salary and bonus bump–for what, we’re not sure, but don’t that stop anything.

Based on the MLC’s 2020 tax return, these employees were the only ones disclosed:

But on the 2021 tax return, the MLC must have exceeded expectations so much that everyone got a raise and they staffed up! Nothing but blue skies on the sunlight uplands!

CEO Kris Ahrend went from a mere $566K a year base with a $57K bonus in 2020 to $603K base and an even bigger bonus in 2021. Ellen Truley also had a fantastic year with her base moving like a rocket from a mere $240K to $308K! During COVID!! And her bonus practically doubled. But for some reason Maurice Russell’s salary actually declined slightly from $236K to $235K, but maybe they pushed it into his bonus which rose from $22K to $25K.

But stay tuned for the 2022 results and maybe bet the trendline going up, because the MLC gets a statutory cost of living adjustment that is not based on performance! Just like streaming royalties they administer!

No wait–the MLC gets the cost of living adjustment not the songwriters, sorry. No, remember that songwriters are told that they will do better if the services do better on revenues. Not on the services’ stock price, but rather on revenues for people who never raise their prices but make millions on selling stock. Except for the physical royalty paid by the labels that agreed to give the songwriters they depend on a higher mechanical rate AND a cost of living bump. But these trillion dollar market cap Big Tech music users don’t ever include the real money in the rising tide that sinks all boats with the trickle down royalty. But we’re told to put it all on red and let it ride.

But we’re glad that the MLC employees are so well compensated and that their salaries are protected in the highest inflation in 40 years with that built-in inflation adjustment.

by Trichordist Editor

How Do TikTok Executives Sleep at Night?

Read the post on Music Business Worldwide and Associated Press “Former Bytedance executive says Chinese Communist Party tracked Hong Kong protesters via data” (Bytedance is the parent company of TikTok.)

by thetrichordist